I expect most thought 80% rebate would be 80% of current pay. Obviously not and I expect even where, as in our case, we obtained signed agreements of staff going on furlough, they were worded sufficiently close to create an expectation of 80% of current pay. So business is going to take a hit come what may. What we pay and what we claim back as rebate, very different beasts.
Now I had weekly staff go furlough mid week last week. This is what I propose for payday Apr 3
1 Pull up archive for March 19 and total each persons pay excluding bonus but including holiday pay. This contained 5 weeks pay dates so divide total by 5 for average March 2019 weekly earnings.
2 Pull up totals for 2019-2020 to date (excluding obviously wk 52) and calculate same dividing by 51
3 Take higher figure of 1 and 2 x 80% as earnings that can be rebated (subject to £2500 x 12 / 52) maximum
4 Divide by 5 for daily figure for part week and x by no of days
5 Enter clockcard info for days worked, note Employers NIC and Employers NEST. Then enter furlough amount at 4 and see how much Employers NIC and NEST has increased. (Note - then remove furlough amount and enter actual furlough pay before running payroll, this may be different to the previous amount to calculate the rebate claim - no one said this would be easy!)
6 Rebate claim will be gross earnings at 4 plus furlough increased Employers NIC and NEST at 5
I think that works although holiday day would include element of bonus but surely we won't have to go back and recalculate every bit of holiday pay?
As regards actual payroll entry, employee will get clock card hours for time worked plus 80% basic hours for rest of furloughed week....except where the furlough rebate at 4 above is higher in some fluke instances, in which case they will get the figure at 4 as you can't claim rebate which is greater than you pay.
We changed pay structure so a reasonable element of pay was bonus until late in 2019 when it got combined into basic rates. This means current basic will be higher than old basic and so we will clearly be getting less rebate than we are paying.
I think that is about as close as I am going to get by tomorrow so if anyone has any comments.
Stay safe everyone
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The HMRC Guidance is not clear on paying weekly or monthly. It is clearer on regular and variable payroll. It has also been released after some employers have furloughed their employees and already paid them for this furloughed period. Some may have been over or under paid.
If your staff are paid a regular weekly amount, then the amount to use will the wages as of 28 February 2020.
If your staff have been employed for more than 12 months before the claim, then you can take the higher of the wage for the same period in the previous year and the average for 2019-20. Based on what you have said about changes to the wages then the average for the year is likely to be higher than the comparative pay, excluding bonuses.
If your staff have been employed for less than 12 months before the claim, then you can take the average for 2019-20.
If your staff joined in February 2020, then you take the pro-rata earnings so far to claim.
You have the complication of doing payroll for actual worked time and furloughed time.
HMRC will release further Guidance on the Employers NI and pension contributions before the system starts. I hope that this will include the week when staff are furloughed, how to calculate weekly amounts from prior years
The HMRC Guidance is not clear on paying weekly or monthly. It is clearer on regular and variable payroll. It has also been released after some employers have furloughed their employees and already paid them for this furloughed period. Some may have been over or under paid.
If your staff are paid a regular weekly amount, then the amount to use will the wages as of 28 February 2020.
If your staff have been employed for more than 12 months before the claim, then you can take the higher of the wage for the same period in the previous year and the average for 2019-20. Based on what you have said about changes to the wages then the average for the year is likely to be higher than the comparative pay, excluding bonuses.
If your staff have been employed for less than 12 months before the claim, then you can take the average for 2019-20.
If your staff joined in February 2020, then you take the pro-rata earnings so far to claim.
You have the complication of doing payroll for actual worked time and furloughed time.
HMRC will release further Guidance on the Employers NI and pension contributions before the system starts. I hope that this will include the week when staff are furloughed, how to calculate weekly amounts from prior years
All agreed with this. But the latest guidance only was made apparent over the weekend. What happens if a weekly paying employer calculated the furloughing differently on Friday last?
Could HMRC please stop tweaking? Otherwise we may calculate WK 52 one way and then WKs 1-4 differently each week as the rules are "clarified".
My fear by doing this, as my client says "I don't mind as long as I am reimbursed", but what happens if the rules are "clarified" further when the refund is claimed in about a month's time?
They’ve changed it again. Oh dear. I have weekly employees who can work overtime so they would be variable except one salaried member. Payday Apr 10 will be fun too! A mixture of March and April furlough which could be different. I have a hunch HMRC will be claiming a lot of penalties for incorrect calculations in the future. The lack of clarity will be forgotten about.
Please say What has changed over the week-end? The links in Accountant A's post takes you to the Gov.UK pages dated 26/3/20 (at the time of posting this).
They re edited the guidance dated 26 March. They have now clarified that for regular earners you use the salary or wages as at 28 February. I then found this general guidance late last night for employees to understand their pay in normal circumstances
https://www.gov.uk/understanding-your-pay/working-out-your-pay
This says when working out weekly pay ignore overtime your employer does not have to pay. Our overtime is at company discretion so I am assuming this general principle still applies to Job Retention Scheme and we can pay 80% of basic only. This makes calculations much easier
So we now have the new guidance over the weekend. On the subject of Overtime it says (4 April update):
"You can claim for any regular payments you are obliged to pay your employees. This includes wages, past overtime, fees and compulsory commission payments. However, discretionary bonus (including tips) and commission payments and non-cash payments should be excluded."
So what does 'past overtime' mean? Do we just pay people what we owe them because they have worked overtime (seems reasonable) or do we have to account for average overtime in the 'past' in working out the 80% - i.e. they get overtime payments without working it? Same question for shift premiums I suppose.
Thanks Wellmeadow - I had an unhappy coffee on Saturday morning when Moneybox revealed the latest changes on Radio 4.
Kate Upcraft is currently updating her "Get the details right" guide on the subject - https://www.accountingweb.co.uk/tax/hmrc-policy/coronavirus-job-retentio...
It's not definitive guidance, but Rebecca Benneyworth offered her own summaries and interpretations in last week's Audience Q&A (eg around directors' eligibility for the CJRS). If you have the time, you may find the comments useful: https://www.accountingweb.co.uk/practice/practice-strategy/accountingweb...
It may be Monday afternoon before Kate's CJRS update shows up, but you can always check the original guidance as most of the people on this thread has done. This drip, drip, drip of guidance is maddening and HMRC is not being good at highlighting new announcements.
We'll try to include indications in our summary of where and when the latest bits have changed.
Only a stupid civil servant can make a simple exercise difficult.
They should just have 80% of your payroll as at the first furlough date. Simple. Just look at your payroll software, apply 80% and presto done.
HMRC audit. Easy. Look at payroll calculate 80% and if it matches great.
Govs applying the KISS principle seems beyond them.
what happens in the case of restaurant hourly paid staff that joined in Feb? how do we calculate their pro-rata? or do we just average their weekly actual hrs worked and that's it?
What happens with the monthly cap £2,500 if there is a 5 week month.
For employees furloughed part way through a month we have pro rated the cap however if there is five weeks in a month 5 x £576 weekly cap (2,500 x 12 / 52) it goes to £2,880 which is above the maximum cap per month?